Monolithic Power Systems Announces Results for the Second

Monolithic Power Systems Announces Results for the Second Quarter Ended June 30, 2018


Monolithic Power Systems, Inc. Condensed Consolidated Statements of Operations (Unaudited, in thousands, except per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Revenue	$	139,761		$	112,198		$	268,911		$	212,560
Cost of revenue		62,197			50,773			119,852			96,293
Gross profit		77,564			61,425			149,059			116,267
Operating expenses:
Research and development		23,481			20,292			45,091			39,186
Selling, general and administrative		28,561			25,873			55,879			47,965
Litigation expense		640			290			1,171			576
Total operating expenses		52,682			46,455			102,141			87,727
Income from operations		24,882			14,970			46,918			28,540
Interest and other income, net		2,232			1,237			2,673			2,618
Income before income taxes		27,114			16,207			49,591			31,158
Income tax provision		2,908			1,193			3,529			1,668
Net income	$	24,206		$	15,014		$	46,062		$	29,490

Net income per share:
Basic	$	0.57		$	0.36		$	1.09		$	0.72
Diluted	$	0.55		$	0.35		$	1.04		$	0.68
Weighted-average shares outstanding:
Basic		42,237			41,323			42,079			41,185
Diluted		44,400			43,397			44,341			43,332

Cash dividends declared per common share	$	0.30		$	0.20		$	0.60		$	0.40


SUPPLEMENTAL FINANCIAL INFORMATION
STOCK-BASED COMPENSATION EXPENSE
(Unaudited, in thousands)
	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Cost of revenue	$	480		$	452		$	913		$	810
Research and development		4,194			3,961			8,188			7,459
Selling, general and administrative		11,218			10,714			21,820			18,520
Total stock-based compensation expense	$	15,892		$	15,127		$	30,921		$	26,789


RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME
(Unaudited, in thousands, except per share amounts)
	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Net income	$	24,206		$	15,014		$	46,062		$	29,490
Net income as a percentage of revenue		17.3	%		13.4	%		17.1	%		13.9	%

Adjustments to reconcile net income to non-GAAP net income:
Stock-based compensation expense		15,892			15,127			30,921			26,789
Amortization of acquisition-related intangible assets		197			513			447			1,026
Deferred compensation plan (income) expense		(9	)		70			40			141
Tax effect		(332	)		(1,201	)		(2,546	)		(2,766	)
Non-GAAP net income	$	39,954		$	29,523		$	74,924		$	54,680
Non-GAAP net income as a percentage of revenue		28.6	%		26.3	%		27.9	%		25.7	%

Non-GAAP net income per share:
Basic	$	0.95		$	0.71		$	1.78		$	1.33
Diluted	$	0.90		$	0.68		$	1.69		$	1.26

Shares used in the calculation of non-GAAP net income per share:
Basic		42,237			41,323			42,079			41,185
Diluted		44,400			43,397			44,341			43,332


RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN
(Unaudited, in thousands)
	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Gross profit	$	77,564		$	61,425		$	149,059		$	116,267
Gross margin		55.5	%		54.7	%		55.4	%		54.7	%

Adjustments to reconcile gross profit to non-GAAP gross profit:
Stock-based compensation expense		480			452			913			810
Amortization of acquisition-related intangible assets		197			513			447			1,026
Non-GAAP gross profit	$	78,241		$	62,390		$	150,419		$	118,103
Non-GAAP gross margin		56.0	%		55.6	%		55.9	%		55.6	%

RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES
(Unaudited, in thousands)
	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Total operating expenses	$	52,682		$	46,455		$	102,141		$	87,727

Adjustments to reconcile total operating expenses to non-GAAP total operating expenses:
Stock-based compensation expense		(15,412	)		(14,675	)		(30,008	)		(25,979	)
Deferred compensation plan expense		(410	)		(603	)		(273	)		(1,407	)
Non-GAAP operating expenses	$	36,860		$	31,177		$	71,860		$	60,341


RECONCILIATION OF OPERATING INCOME TO NON-GAAP OPERATING INCOME
(Unaudited, in thousands)
	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Total operating income	$	24,882		$	14,970		$	46,918		$	28,540
Operating income as a percentage of revenue		17.8	%		13.3	%		17.4	%		13.4	%

Adjustments to reconcile total operating income to non-GAAP total operating income:
Stock-based compensation expense		15,892			15,127			30,921			26,789
Amortization of acquisition-related intangible assets		197			513			447			1,026
Deferred compensation plan expense		410			603			273			1,407
Non-GAAP operating income	$	41,381		$	31,213		$	78,559		$	57,762
Non-GAAP operating income as a percentage of revenue		29.6	%		27.8	%		29.2	%		27.2	%


RECONCILIATION OF INTEREST AND OTHER INCOME, NET, TO NON-GAAP INTEREST AND OTHER INCOME, NET
(Unaudited, in thousands)
	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Total interest and other income, net	$	2,232		$	1,237		$	2,673		$	2,618

Adjustments to reconcile interest and other income to non-GAAP interest and other income:
Deferred compensation plan income		(419	)		(533	)		(233	)		(1,266	)
Non-GAAP interest and other income, net	$	1,813		$	704		$	2,440		$	1,352


RECONCILIATION OF INCOME BEFORE INCOME TAXES TO NON-GAAP INCOME BEFORE INCOME TAXES
(Unaudited, in thousands)
	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Total income before income taxes	$	27,114		$	16,207		$	49,591		$	31,158

Adjustments to reconcile income before income taxes to non-GAAP income before income taxes:
Stock-based compensation expense		15,892			15,127			30,921			26,789
Amortization of acquisition-related intangible assets		197			513			447			1,026
Deferred compensation plan (income) expense		(9	)		70			40			141
Non-GAAP income before income taxes	$	43,194		$	31,917		$	80,999		$	59,114

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